By any measure, Chipotle Mexican Grill was a success story in the restaurant business. It grew from one
location in 1993 to over 2,000 locations by 2016 and essentially created the fast casual dining category.
However, after more than 20 years without a major reported food safety incident, Chipotle was revealed
as the source of multiple outbreaks of illness from norovirus, salmonella, and E. coli that sickened nearly
600 people in 13 states in 2015. The company closed stores, spent several months under investigation
by the U.S. Center for Disease Control and Prevention and other health organizations, and faced a
criminal investigation in connection with the incidents.
After a much-publicized closing of all of its stores on February 8, 2016, and numerous changes to its food
sourcing and preparation practices, Chipotle tried to win back customers with dramatically increased
advertising and free food promotions.
On April 26, the chain announced its first-ever quarterly loss as a public company. Same-store sales for
the first quarter were 29.7% lower than in the previous year. Operating margins fell from 27.5% to 6.8%
over the same period, and the company's share price was down 41% from its summer 2015 high.
After your analysis of the case, prepare a response to the following questions:
1) Chipotle's model of local sourcing and delivering "food with integrity" challenged the traditional
quick-service model of centralized preparation common at McDonald's and others. How can Chipotle
now balance the need to control critical operations through centralized preparation with the desire to